Saving money is not an option. It is a necessity for a secure financial future. We can help you take that all-important first step towards developing the habit of saving.
Saving money is not an option. It is a necessity. For a secure financial future, it is very important to build sufficient savings. We can help you take that all-important first step towards developing the habit of saving. Remember, there are many areas where your savings will play a vital role. Saving up to pay the amount for a house that isn’t covered by a Home Loan or saving for retirement are just a couple of them.
Additional Reading: Are You Saving Enough For Retirement? Find Out
How much to save?
It’s simple. Save as much money as you possibly can. Everyone has different financial obligations and budgets on a monthly basis. Let us help you decide how to determine a monthly savings figure.
The 10% Rule
Standard savings advice dictates that you should be saving, at the very least, 10% of your monthly income. Follow the 10% rule and that will be a good start. You won’t even feel the pinch when that amount is taken out of your salary account and transferred into your Savings Account. Make the transaction automatic with an auto-debit standing instruction to your bank.
Here’s a tip: Consider increasing that 10% gradually over time. Try 20%% or 30%. More the better, we always say.
Save, but not only in your retirement fund
Saving for your retirement is very important. What’s even more important is that you save money every month, apart from your retirement savings. Here are some ideas. Save up money to create an emergency fund or for the down payment on your home. Keep in mind that banks usually give you only about 80% of the cost of your house as a loan. You need to pay the rest.
It is important to have a savings fund that is easily accessible if you need finances to cover essential expenses. Save up for both retirement and to achieve other life goals.
Must Read: Good Investment Options For Retirement
You are not saving enough until you need to alter your lifestyle
A sure-fire way to measure whether your monthly savings amount qualifies as enough, is to evaluate whether your savings makes you cut back on certain frivolous expenses. If you are saving money and find that you cannot indulge an impromptu movie craving. Then you know that your savings are on the right track.
But, wait. There’s no need to be so harsh on yourself. Keep aside money to spend on yourself in addition to your savings. Treat yourself and enjoy your money but not so much that you’re left with an empty bank account at the end of the day.
Gradually increase how much you save
While you might have begun with saving 10-20% of your monthly salary, it will only benefit you to gradually up the ante and try to save more money. You could increase your savings by 10% periodically.
If you are earning a sizable sum of money every month every month and you find that you have more money than you need to live on, after all your expenses and necessities are covered, save the surplus or better yet, invest it!
Additional Reading: Don’t Just Save, Invest
An easy way to boost your savings is to add any windfall funds that you receive. You got an Income Tax refund? Put that away in a Fixed Deposit or invest in a Mutual Fund.
You got a pay raise? Think about saving the increment amount. You could manage easily enough without the added income, now you can surely salt it away and forget about spending that money.
Additional Reading: What to Do With Your Bonus Money
Put a goal to your savings
By giving your savings a definite purpose, you are indirectly motivating yourself to continue saving regularly and diligently. Start with building an emergency fund and ensure that you save up at least 3-6 months of your salary in that fund. This will serve as your financial safety net in case you require finances in an emergency.
There are several goals you can save money for: retirement, a car, a home are just a few. Surely you can think up some more?
Additional Reading: In Your 20s, 30s or 40s? Here’s A List Of Financial Goals For You
Make your money work for you
Put your savings in a suitable savings instrument that can offer you a decent interest rate on your money. A run-of-the-mill Savings Account will give you a meagre 4-6% interest per annum on the account balance. Consider a Fixed Deposit or a Debt Fund which will give you between 7-9% as interest per year.
It is important that you choose a savings product that helps you grow your money over a period of time.
The earlier you start making savings a priority, the sooner you will learn good financial habits. This will definitely benefit you in the years ahead.
Ready to begin your savings?